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German Mortgage Bank Merger
Is Unlikely to Progress Quickly

Germany's mortgage market is almost as miserable a place as retail banking. It is fragmented, dominated by the savings and cooperative banks, and not that profitable.

One cheer then that Deutsche Bank, Dresdner Bank and Commerzbank are spinning off their real-estate units into a combined group. The aim is to gain scale at home, and expand abroad into more profitable real-estate investment banking. In three to five years, the new bank -- Eurohypo -- could even be floated. Direct benefits for the parents are modest: greater...